In this episode, Scott shares 12 notes & headlines on what is currently happening in the venture capital space of healthcare.
- A huge explosion in HC VC in 2020 and 2021. Both fundraising and investing.
- A significant slowdown in 2022 particularly the 2nd half of 2022.
- There are lots of funds that do a huge number of smaller investments. Funds like Rock Health, Arch Venture Partners, New Enterprise, 7Wire Ventures, Martin Ventures, Flare Capital, Costonoa and Khosla for example.
- There are also mega funds that tend to make much larger investments per deal. For example, funds like Sequoia, A16Z (Andreessen Horowitz) General Catalyst, Tiger Global, Kleiner Perkins, Norwest and more. Remiss to not mention rock star investment firms Frist Cressey and Thoma Bravo. Amazing what Bill Frist has accomplished. Bill Frist, M.D.
- There are an increasing number of partnerships between VC funds and health systems and payors. General Catalyst has really made great advances here. See also “Venture Capital firms are partnering with healthcare organizations to improve digital health” Forbes Sai Balasubramanian, M.D., J.D.
- There are also an increasing number of systems that have funded and self manage or outsource their only venture efforts. For example, Advocate Aurora Enterprises led by Scott Powder
Providence Ventures formerly led by Aaron Martin and a ton more. Kaiser Ventures et Al.
- Earlier Series A rounds (and seed rounds) tend to be much smaller than larger rounds.
- VC investing generally is more binary than PE investing. Pre Ebitda vs Post Ebitda investing. VC studies show that an overwhelming majority of profits come from 10 to 20% of investing and more than 50% of investments barely return the invested capital. Generally the earlier stage the higher risk.
- Healthcare venture can include several different sectors- digital health, provider health, biotech, pharma, diagnostics and devices.
- See Modern Healthcare opinion piece by Eric Epstein and Douglas French “Healthcare Venture Capital Potentially Peaked-Now What”.
- See also WSJ ” Digital Health Venture Funding Pulls Back From Last year”.
- Also see Kaiser Health News “Mission and money clash in non profit hospitals’ venture capital ambitions.” Kaiser Health News.